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Growth in Transition Countries: Big Bang versus Gradualism

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  • DELL'ANNO, Roberto

    () (CELPE - Centre of Labour Economics and Economic Policy, University of Salerno - Italy)

  • VILLA, Stefania

    () (CELPE - Centre of Labour Economics and Economic Policy, University of Salerno - Italy)

Abstract

This paper analyses the impact of the speed of transition reforms on economic growth in transition countries in the context of the debate big-bang versus gradualist approach. It builds a new indicator for the speed of transition reforms based on a three-way principal component analysis. It shows that: (i) the speed of transition reforms Granger-causes economic growth and there is no reverse causation; (ii) the impact of contemporaneous speed of transition reforms on economic growth is negative but becomes positive in the longer horizon; and (iii) other factors, such as initial conditions and macroeconomic stabilization program, also drive economic growth. While the first two results are robust to different estimators, the impact of control variables depends on the econometric specification.

Suggested Citation

  • DELL'ANNO, Roberto & VILLA, Stefania, 2012. "Growth in Transition Countries: Big Bang versus Gradualism," CELPE Discussion Papers 122, CELPE - Centre of Labour Economics and Economic Policy, University of Salerno, Italy.
  • Handle: RePEc:sal:celpdp:0122
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    References listed on IDEAS

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    Cited by:

    1. Ichiro Iwasaki & Taku Suzuki, 2016. "Radicalism Versus Gradualism: An Analytical Survey Of The Transition Strategy Debate," Journal of Economic Surveys, Wiley Blackwell, vol. 30(4), pages 807-834, September.

    More about this item

    Keywords

    speed of transition; economic growth; three-way principal components analysis;

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
    • P21 - Economic Systems - - Socialist Systems and Transition Economies - - - Planning, Coordination, and Reform
    • P24 - Economic Systems - - Socialist Systems and Transition Economies - - - National Income, Product, and Expenditure; Money; Inflation

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